Kurdish Conundrum: No Way Out for Northern Iraqi Oil

By

Spencer Swartz

May 6, 2009 10:43 am ET

Back in February 2003, then-deputy defense secretary Paul Wolfowitz testified before the House Budget Committee that Iraqi oil export money would help pay for rebuilding the country – and provide a stable source of revenue for Baghdad. That didn’t quite go according to plan.

Six years later, all Iraqi oil revenue is still not flowing freely into state bank accounts.

The issue revolves around northern Iraq, where Heritage Oil, a small U.K. oil producer, said Wednesday it has discovered an estimated 2.3 billion to 4.2 billion barrels in the autonomous Kurdish region, an area that houses about 20% of Iraq’s total proven oil reserves. (Iraq’s proven crude reserves are the world’s third biggest.)

The only problem: there’s still no prospect of Heritage or any other firm being legally permitted to export crude discovered in Kurdish territory to world markets . . .